The Relevance of Hyman Minsky

Hyman Minsky, who died in 1996, was responsible for an analytical framework that he called the “financial instability hypothesis” or the “Wall Street paradigm.” His analysis is perhaps even more relevant today than it was when Robert Pollin wrote this retrospective of his work in 1997. Minsky’s paradigm led to one central result was is fundamentally at odds with the mainstream view, but is key to understanding our current crisis: Capitalist economies are inherently unstable, and disequilibrium and unemployment are their normal state of affairs. Minsky wrote, “The capitalist market mechanism is flawed in the sense that it does not lead to stable price-full employment equilibrium, and that the basis of the flaw resides in the financial system.” His life work, reviewed here by Pollin, sheds light on ways we can redeem the capitalist marketplace to promote stability and equity.